Crude oil is the world's most traded commodity and the most active energy contract in India. On the Multi Commodity Exchange (MCX), traders buy and sell crude oil futures and options from 09:00 until late at night. This guide explains what an MCX crude contract is, what moves its price, which reports to watch in the evening, and how traders read the crude oil straddle.
What MCX crude oil tracks
MCX crude oil is a rupee contract based on WTI (West Texas Intermediate), the US light crude traded on the New York Mercantile Exchange (NYMEX). MCX settles its crude contracts using the price of the matching NYMEX contract, converted into rupees. So MCX crude moves second by second with WTI, adjusted for the dollar to rupee rate.
MCX crude (₹ per barrel) ≈ WTI (US$ per barrel) × USD/INR
Example: with WTI at US$70.00 and the rupee at ₹88.50, MCX crude trades near ₹6,195 per barrel. If WTI rises US$1 to US$71.00, MCX crude rises about ₹88. If the rupee weakens to ₹89.00 with WTI unchanged, MCX crude rises about ₹35. Brent, the international benchmark used for most Indian oil imports, usually trades a few dollars above WTI; MCX crude follows WTI, not Brent.
A barrel is 159 litres. Petrol and diesel prices at Indian fuel pumps are set by oil marketing companies and include large taxes, so they do not move with MCX crude day to day. MCX crude is a trading contract on the world price, not a guide to what you pay for fuel.
Futures price, spot price and contango
Each crude futures contract is for a particular month. The price of next month's contract is usually a little different from this month's. When later months trade higher, the market is in contango, which usually means supply is plentiful and storage costs are being priced in. When later months trade lower, the market is in backwardation, which usually means supply is tight right now.
This matters when you roll a position. Suppose you hold the current month at ₹6,195 and the next month trades at ₹6,240. Closing one and opening the other does not change your profit, but your new position starts ₹45 higher, so a chart that joins the two months shows a jump that nobody traded. Watch which month a chart or a quote refers to, especially in the week before expiry when most trading moves to the next contract.
The contracts
- Futures. MCX lists a standard crude oil contract and a smaller "mini" contract, each a fixed number of barrels, quoted in rupees per barrel. Profit or loss per lot is the price change multiplied by the barrels in the lot.
- Options. Crude options on MCX give the right to a crude futures position at the strike. They expire shortly before the matching futures, and in-the-money options can devolve into futures positions, as explained in the gold options guide.
- Expiry. Contracts expire every month, a little before the matching NYMEX contract. Because of this, traders roll positions from one month to the next more often than with metals.
Lot sizes, margins and exact expiry dates are set by MCX and are revised over time. Check the current contract specification on MCX or with your broker.
The live crude oil straddle
The at-the-money (ATM) crude straddle, the call plus the put at the strike nearest the futures price, shows how much movement the options market expects. Here it is through today's session:
Crude options usually decay through the Indian afternoon, when the US is asleep, and wake up in the evening. Watch for sharp rises around 18:00 to 21:00 India time, when US data and inventory reports land. The expected move to expiry, worked out from the same straddle, looks like this:
The range is the crude price plus or minus the straddle. It is not a forecast of direction, and in a supply shock crude can move well outside it. The expected move guide explains how to use it.
What moves crude oil prices
- OPEC+ decisions. The group of oil-producing countries led by Saudi Arabia and Russia sets output targets. A surprise cut or increase can move crude several percent in a day.
- Geopolitics. Conflict in the Middle East, attacks on shipping routes, or sanctions on producers raise fears of supply loss and push prices up quickly.
- US inventories and production. Rising US crude stocks suggest weak demand or strong supply; falling stocks suggest the opposite.
- Global growth. Slower growth, especially in China, the largest oil importer, lowers expected demand. Recession fears often hit crude hard.
- The dollar and the rupee. A stronger dollar tends to weigh on crude; a weaker rupee lifts MCX crude.
- Refinery seasons and weather. Summer driving demand in the US and hurricanes in the Gulf of Mexico can matter in season.
The evening calendar
Most crude-moving data comes from the US, so it arrives in the Indian evening. Times below change by one hour when US daylight saving starts or ends:
| Event | Usual day | India time (US summer) | India time (US winter) |
|---|---|---|---|
| US weekly crude inventory report | Wednesday | 20:00 | 21:00 |
| US jobs report | First Friday of the month | 18:00 | 19:00 |
| US inflation (CPI) | Mid-month | 18:00 | 19:00 |
| US Federal Reserve decision | About every six weeks | 23:30 | 00:30 |
Holidays and special schedules shift these, so check the economic calendar each week. A Federal Reserve decision during US winter comes after MCX has closed, so its effect shows up at the next day's open.
How traders use crude oil on MCX
- Directional trades with futures or bought options, often around OPEC+ meetings or the inventory report.
- Intraday option selling during the quiet Indian afternoon, closing before the evening data. This carries large risk if an unexpected headline hits.
- Event straddles. Some traders buy the straddle before the inventory report or an OPEC+ meeting; others sell it, expecting premiums to fall afterwards (IV crush).
- Hedging. Businesses exposed to fuel costs can use crude futures or options to offset price swings.
Risks and common mistakes
- Gap risk. Weekend OPEC+ decisions or wars can make crude open far from Friday's close, skipping any stop-loss.
- Underestimating volatility. Crude can move 3% to 5% in a day on news; position sizes built for NIFTY can be too large for crude.
- Holding into expiry without a plan. Options can devolve into futures; check the rules and margins.
- Trading the report blindly. The market reacts to the surprise against expectations, not to the raw number.
- Ignoring the rupee. A big rupee move changes MCX crude even when WTI is still.
Natural gas, the other big MCX energy contract, behaves quite differently; see the natural gas guide.